GST Refund cannot be rejected for non-filing of reply during Covid-19, request for extension reasonable: HC

Wallem Shipmanagement (India) Pvt. Ltd. Vs Union of India (Bombay High Court)

In a landmark ruling, the Bombay High Court set aside an order that rejected Wallem Shipmanagement (India) Pvt. Ltd.’s tax refund claim against the Union of India. Recognizing the significant disruptions caused by the COVID-19 pandemic, the court deemed the petitioner’s request for an extension reasonable, asserting that the refund cannot be denied on the basis of non-filing of reply.

Analysis: Wallem Shipmanagement, an exporter of services, sought a refund for IGST, CGST, and SGST paid on input services used for export. Their claim was initially denied as the show cause notice proposed that Wallem was an “intermediary,” hence, ineligible for the refund. Amid the COVID-19 pandemic, the petitioner had asked for more time to respond to the show cause notice but was granted only three days. Following this, their refund claim was rejected.

The Bombay High Court, in its wisdom, ruled that the refusal of the refund on the grounds of non-filing of reply was unjust. The court upheld the principles of natural justice, quashing the initial order and show cause notice. It ordered a new show cause notice to be issued and adjudicated after hearing the petitioner.

Conclusion: The ruling of the Bombay High Court grants respite to Wallem Shipmanagement, providing a precedent for other organizations faced with similar circumstances. It highlights the necessity to consider extraordinary global circumstances like a pandemic in judicial proceedings and uphold the principles of natural justice. The court has ordered a new adjudication process, enabling Wallem to present their case once again for the claimed tax refund.

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